Crowd Factory

  • May 2, 2012
  • I read Chaucer’s Canterbury Tales in college (yes, in Middle English and no, it wasn’t that long ago) and now every April brings me back to the opening verses about spring time and renewal.  This April was especially memorable in our industry and as the month has just passed I wanted to take a moment to discuss some of the things I witnessed.

    Mostly, for me, there was an unmistakable sense of renewal in CRM and in the tech sector more generally.  Facebook continued to primp for its assumed to be historic IPO and bought Instagram, a company with an application for mobile devices and not much more than a website otherwise.  Facebook paid a billion bucks for Instagram, no doubt a sign of the future.  Marketo heading for its own IPO at some point bought Crowd Factory combining marketing solutions into a suite that will offer modern and ultra modern marketing.

    Thankfully, there was more innovation than just the M&A variety.  I went to a couple of analyst briefing sessions that were interesting for different reasons and I will have to assume that the events I couldn’t fit in were much the same.  Oracle held a deep briefing to show off progress on all fronts.  The event made me a believer that they have a plan or plans that merge into a powerful vision of engineered systems and software that meets some of the challenges of the social/mobile/analytic/big data world we’re moving into at light speed.

    SugarCRM raised the bar and showed the world that it is growing rapidly and that its open source approach to business is very much in the mainstream along with operating system, server and database open source projects that support, in one way or another, the innovations in the rest of the industry.  It looks to me like Sugar is becoming the go to CRM that everyone has to include on the shopping list.  Open source might not be for everybody, but then again Sugar’s growth numbers and recent capital round indicate they just might be.

    Salesforce announced its Government Cloud in an effort to capture some of the new business likely to come out of local, state and federal initiatives to cut IT costs and improve constituent service.  When government becomes an adopter of a new technology like cloud computing it’s safe to say that it’s not a radical departure anymore.

    But that doesn’t mean we stop innovating.  As the Salesforce announcement made clear, the big issue for government will be security and, I would add, up time.  So I look for a new era of innovation around both security and fault tolerance as cloud computing works to measure up to a nine nines reliability standard found in other utilities.

    Finally, sneaking in just under the wire, on April 30, Paul Greenberg announced the second season of CRM Idol, the competition that seeks to discover hot emerging companies with great technology ideas in our space.  Full disclosure, I am Paul’s friend, but that category includes about half the world.  Last year, Idol’s first, was a great learning experiment.  As one of the founding primary judges (others in the U.S. are Brent Leary, Esteban Kolsky, Jesus Hoyos) I was present for all of it and I can say we learned a lot.

    We got a stellar crop of finalists last year (both in the U.S. and Europe) including Crowd Factory, Stone Cobra, Assistly and Get Satisfaction, which won the contest.  Two of the four were bought — Assistly mid-way through the competition and Crowd Factory last month.

    We are expecting big things from this year’s group of contestants too.  The announcement by Greenberg on Monday is the opening of the season and companies interested in participating should visit the Idol website for details.  There are a few rules that make this a real competition among emerging companies — you can’t be too old or too rich for example — so check it out.

    Being a software entrepreneur is not easy.  While you might think that venture funding has eased many of the burdens, raising capital is not easy though it can be insightful.  VC’s look not just for new companies or new solutions but new categories.  And what looked hot last year may no longer be attractive.  They’re always looking for something that has never been seen before that nonetheless sparks interest and fills a need.  CRM Idol is like that.  The companies that do best are those that don’t conform to a pattern but instead break new ground.

    If you pay attention to Idol you might get an idea of the future of CRM and possibly other things.  Just looking at the Instagram deal tells me potentially that the hottest new companies might be those writing for the smartphone market.  That, of course, would be a significant finding — the kind of thing that will make future Aprils so interesting.

    Published: 12 years ago

    Note:  I have been traveling so much lately that I haven’t had time to publish everything I have been writing.  A little archeology on my MacBook produced this analysis from last week.

    Marketo and CrowdFactory are joining forces to produce an integrated social marketing suite.  The deal was announced last Wednesday and you can reference the details here: (Barney can you add the url for the PR when it comes out?)

    Here are my takeaways.

    1. Marketo is a hot emerging company focusing on digital marketing, is a good place to hang your hat if you want to collect venture capital and have an IPO.  While digital marketing is an important thing today, I think it is showing signs of reaching maturity.  It’s been around long enough that the category creator, Eloqua, has already gone public and the solution class is becoming well known.  This is not to say that everyone has digital marketing in-house or even knows what it is.  But there’s ROI, or as Marketo might tell you RPM for revenue performance management.  Nonetheless there’s a lot of market space left.
    2. CrowdFactory is also emerging but it is at an earlier stage than Marketo.  It’s solution type is also newer and less well understood.  CrowdFactory is a social marketing solution that I first became aware of during 2011’s CRM Idol contest.  As a primary judge in the competition, I saw their earliest briefing and was impressed.  They use social techniques to more actively involve customers in marketing campaigns and the solution set includes some aspects of the still nascent idea called gamification.  But as a social campaign solution they are more tactical than Marketo in some ways.

    The combination of Marketo and CrowdFactory gives the combined company greater ability to play in the strategic as opposed to tactical realm.  I can see Marketo as more of a B2B play and CrowdFactory as more of a B2C offering.  The combination not only cross fertilizes each area with it’s opposite member’s best ideas, it also gives more of an end to end marketing twist to companies that go after each kind of market.

    More importantly I see marketing changing in the general direction that the combined forces of Marketo and CrowdFactory are proceeding.  Conventional B2B marketing with more of an accelerated B2C flavor would undoubtedly warm the cockles (a technical term) of many sales managers souls.  Likewise, B2C marketing campaigns with more of a thought leadership (as opposed to buy this now!) approach might elevate that conversation.

    It’s my belief that in the near future we need to find more ways to understand opportunities and automate them to help reduce the overhead and time it takes to more deals ahead and for this reason alone I like this merger.

    Published: 12 years ago

    Last week Oracle bought the HR SaaS company, Teleo for $1.9 billion, which to me means it’s time to do you-know-what to the fire and call in the dogs.  This hunt is officially over and out.

    The hunt in question is for legitimacy and primacy of the SaaS and cloud computing model.  Many people would argue that legitimacy happened when Salesforce had its first billion dollar year—heck its first $100 million would do just as well.  But primacy has always been a wee bit dodgy.

    There’s been a see-saw battle between the on premise and cloud communities for many years which culminated with all the major software companies finally adopting and promoting some version of their own cloud computing architecture in the last two years.  Microsoft famously thinks the Web needs an operating system, Oracle announced its cloud, driven by its ultra husky next generation servers last fall at OpenWorld and SAP has been trying its hand at multiple iterations of cloud computing.

    More importantly a raft of small entrepreneurial companies are offering hosting facilities much like when this business got started with ASPs or application service providers.  It’s tough to make a living selling commodity infrastructure but the advances made by companies like—such as the application in a browser rather than client-server—make selling infrastructure possible.

    The Taleo announcement was so important that I had people emailing me to offer their thoughts.  For instance, Tien Tzuo, one of the early employees at Salesforce and now the CEO of Zuora and billing and payments solution provider for subscription businesses, had this to say:

    “This is the tipping point for the cloud.  RightNow [bought by Oracle], SuccessFactors [bought by SAP] and now Taleo.  The big old school enterprise players have just validated the cloud as the future and signaled the end of their reign.”  I agree and it is reminiscent of Clay Christensen’s Innovator’s Dilemma, but Tzuo takes this theme even further.

    “We’ve seen this before,” he says.  “Siebel acquired Upshot trying to look more SaaS-like and apparently to box into a corner.  Instead it backfired.  That one deal validated the SaaS model to CRM buyers.  And almost overnight Salesforce went from up-and-comer to leader.”

    Yup, I was there too.  But I think what’s happening now is the incumbents are accelerating their efforts to catch up.  With each vendor articulating a cloud strategy we’re seeing mostly closed strategies, which means things might not change very much for their customers.  Some vendors are trying to have it both ways, clouds plus customer lock-in.

    Closed strategies limit choices and options and at least in some situations we’ll continue to see higher than necessary costs for things like management and development or maintenance.  What many of the clouds offer is a trimming of the cost of infrastructure, period.  I think that’s what Marc Benioff means when he says beware of the false cloud.

    To put a final point on it Tzuo says, “All these cloud acquisitions won’t help ERP one bit.  Acquiring cloud companies doesn’t make you a cloud company….It’s an attempt to distract customers and hope they will forget about the boat anchor they’re stuck with.”

    Tzuo is not the only skeptic.  Echoing Tzuo, Ted Elliott, CEO at Jobscience, an HR solutions company based on the platform and so a Teleo competitor said, “This really represents a capitulation by Oracle regarding the cloud.  Unfortunately this would have been great in 2004, but in 2012 we are transforming towards social; a server company that builds databases is transaction oriented and social is about relationships, people not numbers”

    Elliott’s got a point and so does Tzuo and perhaps the Teleo acquisition says a lot about a conventional software company trying to make the cloud conventional.  But at this point the cloud is conventional, it’s just not conventional in that way.  So a paradigm has been shifted.

    Perhaps most importantly, all this hoopla about clouds and rather conventional application areas means that many big vendors are not giving the attention they ought to be giving (in my opinion) to social media companies.  They are proving to be a generation behind.  Well beyond darlings like Facebook and Twitter, there are fascinating companies like Get Satisfaction, Studentforce and Crowd Factory—just to pick a few of names out of a hat—that are rocking their worlds and causing the next disruptions.

    That’s where Salesforce has focused its energies.  They still talk a lot about the cloud and its centrality but they’re also onto a new vision—the social enterprise.  The cloud is increasingly about plumbing, the social enterprise is about putting the plumbing to work.

    Published: 12 years ago